I posted a chart of CRM’s revenue ramp yesterday and all of the faggots got defensive over it, implying I was calling them a scam. I know it’s not a scam — but a growth hack.
All of the gains in productivity utilizing tech can be found inside this one sector: SAAS (software as a service).
In a way, NFLX falls into this group too, as well as Amazon Prime. The favorite business model on Wall Street is a subscription based one. Over the past 10 years, this model has exploded everywhere, as techFAGS use their wits to figure out human behavior, what colors to use in banner ads, words that make people buy shit, etc.
The theory behind SAAS is simple. Find a repeatable business model by subscription, with a low churn rate, that can grow thru a sales force or ad campaigns. The more money you throw at it, the faster they grow. Even during the criss of 2008, these companies grew.
Also, they never show profits — because all of their money is reinvested into growth. It seems like the biggest fucking scam ever — but it’s simply a matter of growing subscriptions, up selling, cross selling, and making sure customers are happy.
Some of the big winners the past year are in this space: ADBE, CRM, NOW, NEWR, ZEN. I will tell you now, the main high growth player in this sector now is ZEN. I’d be shocked if they didn’t catch a bid inside a year or so.
When does the party end, if ever?
Valuation isn’t even stretched, based off recent historical compares.
It’s all about how easy it is to get their meaty hooks out of your business.
Consider how much your site is dependent on wordpress. There’s no way in hell you’d switch to joomla on a whim. Too much work, and the software technically is free.
Take another company, like ZEN. If you’re an institution that has been on zendesk for more than a year, it’s very very hard to justify switching. It’s not like a cell phone plan where the company will hold your hand and switch numbers for you.
One company you definitely shouldn’t sleep on is hubspot (HUBS). They’re like CRM but focus on small/mid size companies. From the people I’ve worked with, it’s super hard to “unhook” your business from them. Very low churn.
The only way I see it ending is if competitors start showing serious growth. I think ZEN could be in trouble with new chat-based helpdesks… think Intercom, Drift, and a few others.
Oh look an actual internet comment that isn’t hot garbage. It’s like we’re back in 2010.
What do you think about NEWR?
Crm owns 80% of a saturated crm market. Cash cow. However, The big opportunity is their platform and selling big dollar enterprise solutions as moving to the cloud is becoming mainstream and necessary. Research AI, hiroku, lightning, etc. No one has a more robust cloud solution. Crm goes much higher long term
Add $TEAM to your list. Next big IPO in the space will be Slack in late 2018.